I'm the coauthor of The New Killer Apps: How Large Companies Can Out-Innovate Start-Ups. I’m also the coauthor of Unleashing the Killer App: Digital Strategies for Market Dominance (Harvard Business School Press, 1998) and Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years (Portfolio, 2008).
I cofounded and am the managing director of the Devil’s Advocate Group, a consultancy that helps business leaders design and stress test their innovation strategies.
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Google's Trillion-Dollar Driverless Car -- Part 2: The Ripple Effects

While Part 1 of this series laid out the significant benefits in safety and savings that could come from a driverless car, there is an old saying: One man’s savings are another man’s lost revenue.

The fact is that a driverless car would slash hundreds of billions of dollars of annual revenue, or even trillions, from all sorts of entities: car makers, parts suppliers, car dealers, auto insurers, auto financiers, body shops, emergency rooms, health insurers, medical practices, personal-injury lawyers, government taxing authorities, road-construction companies, parking-lot operators, oil companies, owners of urban real estate, and on and on and on.

At the same time, the driverless car will create enormously lucrative business opportunities to serve new customer needs.

I’ll turn first to the revenue that is in peril and then examine the opportunities. I invite you to offer your own ideas on potential business threats and opportunities. Please share them in the comments section below.

While car sales might initially boom, as the fleet shifted to driverless cars, sales would then fall off a cliff—and new and used car sales add up to a $600 billion-a-year business in the US. Any drop in sales would also affect auto finance companies, which write loans for almost 70% of new car purchases and half of used car purchases. Many parts would disappear from cars: Who needs airbags if you aren’t going to crash, or backup assistance when the car parks itself? The amount of steel used in cars would drop, because cars wouldn’t need to be as massive and sturdy. Body shops would mostly disappear for lack of business.

Auto insurers, which collect more than $200 billion in personal auto premiums each year in the US, would initially see profits rise as accidents declined and payments to customers dropped. They would, however, eventually see something like 90% of premiums disappear. In fact, the US model of mandatory personal auto insurance might become archaic.

Emergency rooms would lose millions of patients a year, and hospitals would have hundreds of thousands fewer people who needed to stay overnight. Health insurers would have to give up revenue as car-related injuries plummeted.

Personal-injury lawyers would see car-related cases all but disappear. In fact, the trend is already moving in that direction because the spread of cameras and sensors in cars makes it much easier to document who is to blame in an accident and removes the gray areas where lawyers may get involved.

If cars are in nearly constant use and can come when called, the need for parking almost vanishes. One MIT study claims that, in some U.S. cities, parking lots cover more than a third of the land area. Other estimates are that there are as many as 2 billion parking spaces in the U.S., about the size of Connecticut and Vermont combined. Much of this valuable real estate could be reclaimed for more beneficial social and economic purposes. At the same time, property values, especially in cities, would decline as additional supply becomes available.

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We don’t have to make a 100% safe car. We only need to make a car that is significantly safer than the average human driver.

We’re not the delusional ones. We can prove the computers are more reliable than you because we know how many accidents humans have per mile driven and how many accidents the computers have per mile driven under the same conditions. You’re the one who thinks you’re more reliable than the machines with nothing to back it up.

Not really. Licenses like this are issued by state. All that needs to happen is for one state to get on board and then a bunch of others will get on the bandwagon. Nobody wants to be left out of the future.

I think you can add that never, is a very long time. We’ve grown a bit impatient with technological process even though it continues the exponential march. Perhaps it’s because we underestimated some of the complexity of the tasks, but in the end, none of these advancements is technically impossible.

If we’re impatient, then there is a lot we can actually do to help accelerate it. Instead of voicing criticism we can create demand, be it in commerce or government.

I look forward to your last post in the series, because I really do think people need to wake up to the reality that we are already in motion. If we want to have a better future we need to start planning now for what we want it to look like. Otherwise the dystopian versions may be allowed to become self-fulfilling prophecies.

I waxed a bit on the changes ahead including driverless cars three years ago and I’ll be interested to see how long it is relevant: http://feedbackgovernsdynamics.blogspot.com/2009/05/hang-on-get-ready-and-go.html

These advantages of the driverless car (higher speeds and less traffic) could curb the development of the megacities of the future and lead to another boom in the suburbanization of America helping the housing and construction industries as well. You could potentially work on you commute to work. Wouldn’t that be nice.

These driverless car concept reminded me of something that happened over a decade ago when Microsoft released Windows NT. I believe it was the Navy that had a ship that was 100% controlled by an Windows NT based system. They were testing it to be able to see if the computer could operate the ship in the middle of the ocean. What happened? NT crashed and the ship was stranded. I laughed so hard when that happened because Microsoft was touting how fault tolerant the OS was. Guess what? I don’t think they have driverless ships in the military for this reason.

Operating systems tend to crash. Heck, Google can’t even make a smartphone/tablet OS that won’t be susceptible to locking up, freezing, etc. It’s probably impossible to do that.

Ever hear of Murphy’s law? “Anything that can go wrong will go wrong.”

Sorry, Google and all of the brainwashed Google fanboys that think that driverless cars will become reality have forgotten about Murphy’s law.

Quality and safety are relative measures. Right now, more than 1 million people die each year in accidents worldwide, and about 50 million are injured — mostly due to human error. Murphy’s Law is already in place, the question is whether we can tame it. That said, I doubt we’ll see driverless cars without an “override” button any time soon.

The best ways to avoid deaths when it invovles driving cars are as follows:

1. No talking on the phone without a handsfree system. 2. No text messaging. 3. Don’t consume drugs/alcohol ever again. 4. Get plenty of rest before long drives. 5. Take safety driving classes every so often to keep your safety driving “chops” up to date. 6. Don’t drive a car that has too much power than you can safely handle. 7. Have safer cars in terms of braking systems, suspension systems, which are becoming quite good on cars like Mercedes. Better maintenance of existing cars, and better design for protecting passengers from getting hurt.

How many car deaths have their been with someone that adheres to these? Probably almost nil. People walk away from accidents involving incredibly safe cars to drive.

People get involved with accidents that are talking on a non-handsfree phone, text messaging while driving, driving drunk/on drugs/with an hangover, not properly trained on safety driving, etc.

Making these cars driverless is dumb. if anyone is going to get involved with this, it should be car mfg with a track record of how to test these things. I highly doubt Google knows how to test these cars in all possible road conditions. To me, this is Google’s attempt at manipulating people into thinking they are “innovative”. This concept has been worked on before and so have those glasses they are working on. These are NOT NEW IDEAS. They are old ideas being marketed as Google innovations to help market themselves and dummies buy into it.

If you want to be in a car where you are much safer and don’t have to drive, take a taxi, a bus, or a limo. Leave the driving and liability to someone that’s a professional.